Energy firm Dong Energy has installed the first of 32, 8-MW wind turbines at the Burdo Bank Extension offshore wind farm. Shipped from Belfast, the 31 remaining will be installed over the next few months, according to Reuters.

Measuring at 195 metres tall, the MHI Vestas 8-MW wind turbines are the largest in the world overtaking the turbines at Westermost Rough wind farm off the Yorkshire Coast in the North Sea, which stand at 177 metres tall with a total of six megawatts.

Burdo Bank wind farm currently have 25 smaller 3.6 MW wind turbines. With the last wind turbine expected to be in place by the first half of next year, the 258-MW wind farm is expected to produce enough electricity to power more than 230,000 U.K. homes.

Speaking to Reuters, Benj Sykes, Dong’s U.K. country manager for wind power said:

This will be the first commercial deployment of the world’s largest wind turbines. Using larger turbines is a critical part of the industry’s drive in getting costs down.

Sykes added that the more megawatts a turbine has the lower the overall cost per MW.

The wind turbine extension is part of an infrastructure agreement that was agreed this year by nine countries bordering the North Sea: Belgium, Denmark, France, Germany, Holland, Ireland, Luxembourg, Norway, and Sweden.

Last year, 17.7 percent of electricity came from wind power across the Irish Sea in Ireland, second only in the North Sea area to Denmark’s 30 percent.

Images from Dong Energy.

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South Korean Internet Giant to Offer Cryptocurrency Support to Millions

A South Korean internet giant by the name of Kakao is planning to integrate cryptocurrency support across its business offerings, boosting the prospect of mainstream adoption in one of the world’s hottest markets.

Kakao to Support Cryptocurrencies

Local media outlet Asia Business has reported that Kakao will begin integrating cryptocurrency payments into its business model this year. The company runs a slew of popular services, including KakaoTalk and KakaoPay. Later this year, users of KakaoPay will be able to send and receive crypto payments instantly. The platform has more than three million registered users.

Once KakaoPay is set up with crypto support, the company’s other applications will also be compatible with the new payment method. In other words, cryptocurrencies would then apply to a range of applications hosted by Kakao.

CCN describes Kakao as one of South Korea’s two largest internet companies. Interestingly and perhaps not coincidentally, its subsidiary company is also behind the popular Upbit exchange, which is the world’s sixth-largest digital currency platform by trading volume. According to CoinMarketCap, Upbit processed nearly $500 million worth of digital currency transactions over the past 24 hours.

Kakao is planning to increase its presence in the crypto market this year. In addition to accepting and facilitating payments, it is planning to launch its own crypto asset.

South Korean Crypto Market

The news comes as South Korea is cementing itself as a global hub for the blockchain economy. Backed by favorable regulations, popular exchanges and high investor penetration, the Asian country has emerged as an important bellwether for the global crypto market.

South Korea’s prominence in the crypto world could be observed by the market’s reaction to the country’s evolving regulatory landscape. On Jan. 30, South Korean authorities implemented a ban on anonymous trading accounts, but have since backed away from calls for more stringent regulation. Instead, authorities will support measures that bring about greater transparency on domestic exchanges.

Last month, South Korea’s Finance Minister Kim Dong-yeon confirmed his office has “no intention to ban or suppress cryptocurrency.” Other ministries, such as the Fair Trade Commission, also argued that a ban on cryptocurrencies would constitute a violation of the country’s e-commerce laws.

In addition to Upbit, South Korea is home to two of the top-five crypto exchanges – OKEx and Bithumb. On Saturday, OKEx was no. 1 in transaction volumes, with more than $1.4 billion processed.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 230 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.

Sea Ltd. A Controversial Situation

For all the “cash grab” accusations that have been directed at the thousands of Initial Coin Offerings (ICOs), they represent chump change compared to Sea Ltd. (NYSE:SE) The Singapore based company went public just last October raising $880 million. That placed a value on the total company of almost $2.6 billion by our calculations. That is a huge valuation for a company that was losing $200+ million at the time.

Sea Ltd. was fortunate in convincing top underwriters to do their offering. The list included no less than Goldman Sachs, Morgan Stanley and Credit Suisse. The opportunities for Sea Ltd. look pretty awesome as we describe below. The financials reports of Sea Ltd reveal a different story.

On February 28, Sea Ltd. reported full year 2017 revenue of $414 million, up 19.8% year over year. The company racked up a whopping $561 million loss, a 149% increase over the previous year. Not many companies can afford to lose more money than they generate in revenues. Sea Ltd. is one of those rare few, and that has investors nervous. Is Sea Ltd simply misunderstood or is the stock a ripe target for short sellers?

How They Generate Revenues

Sea claims to be the leading internet company in Greater Southeast Asia, or GSEA, based on their number one market share by revenue in the region’s online game market, their number one market share in the region’s e-commerce market, and their position as a leader in the region’s digital payments market by e-wallet.

That is a lot of market leadership when Sea revenues were less the $400 million annually. It appears everywhere we read the company claims market leadership but qualifies this by limiting the time period such as “June 2017” or in small regions. That sort of language always makes me wince.

Huge Addressable Market

It is not difficult to appreciate the enormity of the GSEA market. Here are a few stats from the October prospectus. GSEA contains 585.3 million population generating $3 trillion in GDP. If that were not enough, there are 315.4 million Internet users and 237.1 million smartphone users.

That is the overview, here is what made Sea Ltd. appealing to initial investors back in October. The size of the online game market is $3.5 billion growing at 19.6%. The e-commerce market is placed at $23 billion growing just under 30% followed by the $6.5 billion electronic payment business showing a 30+% expansion. That is pretty impressive stuff.

The Business Model

Sea has created an integrated platform consisting of digital entertainment (focused on online games), e-commerce, and digital financial services (focused on e-wallet services), each localized to meet the unique characteristics of GSEA.

Sea operates with three main platforms that also serve as consumer brand names. These include Garena (Video Games), Shopee (e-commerce) and AirPay (financial services).

Garena

The Garena platform is a gaming network where Sea creates exclusive licenses with developers. Online gaming licenses typically run three to seven years. During this period fees are charged to platform members of which Sea retains 65%-80% of gross billings. Other related services include video content such as live streaming of online gameplay, chat and online forums. Finally, Garena claims they are the GSEA leader in eSports.

All in all there is little doubt the markets that address are large and growing. Eventually we will come to how Sea makes money.

Shopee

Think of Shopee as a small but rapidly growing Amazon, Ebay or Alibaba wannabe. Shopee is a third-party marketplace that connects buyers and sellers. They do not hold inventory. Management believes buyers choose Shopee because they trust the brand to provide easy access to a wide range of products coupled with strong customer service.

AirPay

The AirPay platform provides digital financial services. Through the AirPay e-wallet, consumers use either the AirPay App or one of 177.9 thousand registered retail partners,to make payments to a wide variety of product and service providers.

During the first half of 2017, transactions for AirPay e-wallet totaled nearly $475 million. The AirPay App is available in Thailand, Vietnam and Taiwan, and AirPay counters are operating in Thailand, Vietnam, Indonesia and the Philippines. This leaves considerable territorial expansion opportunities for the future.

Management is in the process of integrating AirPay with Garena where it recently processed 40% of aggregate gross billings. AirPay provides payment services to Shopee as well.

Use Of Proceeds

The IPO raised gross proceeds of $880 million for approximately 32% of the Class A shares. Based solely on this, underwriters placed roughly a $2.6 billion valuation on Sea Ltd. This excludes 151.5 million Class B issued and outstanding shares. The value is not determinable at this time. Accepting the vast market potential for the company’s services, what did investors get in return. Let’s dig into the financials starting with the Use of Proceeds statement taken directly from the October prospectus.

“The primary purposes of this offering are to create a public market for our Class A ordinary shares in the form of ADSs for the benefit of all shareholders, retain talented employees by providing them with equity incentives and obtain additional capital. We plan to use the net proceeds of this offering primarily for growing our business, including user acquisition, content procurement and research and development, as well as for working capital and other general corporate purposes.”

What would have been nice is if there was some mention of how a huge chunk of the proceeds would be used to pay down a mountain of debt: about $674 million of long term debt. Little wonder investors are nervous.

There is absolutely nothing wrong with paying off debt especially if it results in a benefit to equity shareholders. However, with the company losing money at nearly $561 million, it is a bit challenging to find how shareholders come out ahead. Based on analyst projections, Sea Ltd. is not likely to make a profit until at least 2020 and that means they will be in a negative cash flow position for quite a while.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 38 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.

Splunk Inc. Cyber Security and Much More

By now the terms Big Data and Cyber Security have been in our lexicon for some time in no small measure thanks to events at the FBI, The White House and lots of other sources. No matter if you are a government, major corporation or just Joe Schmo, this is serious stuff. Cyber Security is not a battle but a war. Here is Splunk (SPLK: NASDAQ) one company that’s seriously involved.

Operational Intelligence

Imagine your title is Chief of Cyber Security for The United States Department of State. Everyone in the world is trying to break into your highly classified servers 24/7 using world-class hackers and their most devious schemes.

Your job is not just to patch security breaches but also to prevent them from gaining entry. Billions of data bits are flying around your network every day. The challenge before you is to determine which ones represent a cyber security risk. So much data is out there needs to be absorbed and organized. This is where Operational Intelligence steps in identifying aberrant data patterns at the earliest moment.

The explosion of data is threatening to cripple the economy. We are talking about data from everyone and from everywhere: personal, business, government, social media, entertainment etc. Every mobile phone call, every tweet, every online purchase, every retail transaction creates more data. The much talked about “Internet of Things”, insures this volume will keep growing exponentially. This is what “big data” is all about. The trick is organizing the information and turning it into bits of actionable information.

Getting Traction: Cyber Security Is Key

Splunk is the fastest growing company in the Operational Intelligence market place. Cyber Security is basically how Splunk got into business. Today, it is over 40% of company and the fastest growing segment. It would be far higher piece of the pie were it not for the phenomenon of “Unintended Use Cases”. Here is a quick explanation.

Once the Splunk platform is downloaded, Cyber Security customers discover many unexpected practical uses that lead to purchases of additional licenses. That leads to more and more business in areas like business analytics, corporate infrastructure management as well as general analytics. Not long ago, management stated that 30% of their new business resulted from Unintended Use Cases. That’s pretty cool.

Critical Elements For Success Are Present

Splunk security solutions offer leading edge technology providing the capability to deliver a real-time detection. Security experts claim that in order to succeed, detection of an intruder needs to take place in one minute or less with counter action needed in one hour or less.

Investments in these key technologies provide SPLUNK with its advantage. Specifically, technologies are designed to support large volumes of machine data on a massive scale with minimal overhead.

Competition

Splunk competes against a number of different companies many of whom are much larger. The list includes BMC Software, CA Technologies, HP, IBM, Intel, Microsoft, Dell Software and VMware IBM and Oracle. The strength of Splunks competitiveness is illustrated by their customer list that includes a “who’s who list of global corporations and government entities.

Splunk innovations and marketing strategy have opened the door to over 11,000 total customers including more than 80 Fortune 100 companies, various military and agencies of the United States government.

Splunk: Breakdown of The Business

Splunk divides it business into two channels. Sales of software lead to demand for maintenance and service to support its product offerings. Software is targeted to a variety of verticals including financial services, government, healthcare, industrial, media/entertainment, and retail including ecommerce, technology and telecommunications. More than 60% of Splunk’s business comes from software.

Pricing Based on Usage

Splunk pricing is based on a downward sliding scale of actual usage starting as little as 1 Gigabit to over 100 Gigabits of data per day. In other words, there are no preset amounts, the more you use the more you pay.

Core Products include Splunk Enterprise, Splunk Cloud and Splunk Light and Hunk. Each of these products performs the essential function of dramatically reducing search and assembly of information, reducing costs by using less hardware, detecting data anomalies and producing high resolution data visualizations.

Zero to 60 in 3.5 Seconds

As the current decade began, revenues stood at a paltry $18 million. The current year ending January 2019 will see revenues coming in near the $1.6 billion level. This would make Splunk the fastest to reach $500 million and one of the very few companies to average better than 40% annual growth. Indeed, the wind has been at the company’s back and Splunk is at the right place at the right time.

Speed Has Come At A Cost

Management reports to shareholders have yet to show a profit. Gross Profits are at a lofty 80+% level but offset by heavy spending that is now tapering off. For example, Research costs peaked at 31% in fiscal 2017 falling to 26% in the nine months of fiscal 2018.

Selling and Admin consumed 85% of every dollar of revenues in 2017 but since has tapered to 80%. That is still far too high but nevertheless trending in the right direction. Wall Street has the company pegged to reach break even by the April 2018 quarter.

Will the silly sounding company named Splunk continue to rocket forward? Technology is a treacherous business with the carcasses of companies littering the back alleys of Silicon Valley. One thing is absolutely certain. The growth of data and cybersecurity is accelerating and this is the key driver of demand.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 38 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.

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